The need for title insurance arose historically from the fact that
traditional methods of conveying real property did not provide adequate safety
to the parties involved. Until a century ago, transferring title to real
property was handled primarily by conveyancers, who were responsible for all
aspects of the transaction. The conveyancer conducted a title search to
determine the ownership rights of the seller and any other rights, interests,
liens or encumbrances that might exist with respect to the property, and, based
on its search, provide a signed abstract (or description) of the status of the
title. Although the conveyancer was generally not a lawyer, that individual was
recognized as an authority on real estate law. The origin of title insurance is
directly traceable to the limited protection that the work of such a conveyancer
provided to the purchaser of real property.

In 1868, the celebrated case of Watson v. Muirhead (57 Pa. 161) was
filed in Pennsylvania. In that case, Muirhead, a conveyancer, had
searched and abstracted a title for Watson, the purchaser of a parcel of
real property. In good faith and after consulting an attorney, Muirhead
chose to ignore certain recorded judgments and to report the title as
good and unencumbered. On the basis of Muirhead's abstract, Watson went
ahead with the purchase, but was subsequently presented with, and
required to satisfy, the liens that Muirhead had concluded were not
impairments to title. Watson sued Muirhead to recover his losses, but
the Pennsylvania Supreme Court ruled that there was no negligence on the conveyancer's part and dismissed the case. Watson, an innocent purchaser
who had suffered financial damages because of the encumbrances on his
title, had no recourse.

The decision of Watson v. Muirhead demonstrated clearly that the
existing conveyancing system could not provide total assurance to
purchasers of real property that they would be safe and secure in their
ownership. As a result of that decision, the Pennsylvania legislature
shortly thereafter passed an act "to provide for the incorporation and
regulation of title insurance companies." The first title company was
founded in Philadelphia in 1876.

This new type of insurance (called "title insurance"), addressed the
concerns raised in Watson v. Muirhead by providing: (1) responsibility
without proof of negligence; (2) financial protection through a
reduction of the risk of insolvency; and (3) the assumption of risks
beyond those disclosed in the public records (for which the abstractor
was not liable).

Since the late 1800s, the title insurance industry has grown to where
it now is; an essential component in an overwhelming majority of real
estate transactions in this country. The services provided by the title
insurers may vary somewhat from one area of the country to the other,
reflecting the different laws, customs and procedures of the various
states and counties throughout the nation. But the essential purpose of
these services is the same – to assist all of the parties in real estate
transactions by ensuring that the acquisition or transfer of an interest
in real estate can be effected with a maximum degree of efficiency,
security and safety. Old Republic Title is proud to play a leading and
innovative role in this industry.